Assessing Osisko Development (TSXV:ODV) Valuation After Recent Share Price Weakness

Why Osisko Development is on investors’ radar today

Osisko Development (TSXV:ODV) has moved onto many watchlists after recent share price pressure, with the stock down 7.7% on the day and about 15% over the past month.

See our latest analysis for Osisko Development.

Beyond today’s 7.7% drop in the share price, the stock’s recent 30 day share price return of down 15.3% contrasts with a 1 year total shareholder return of 70.2%. This suggests momentum has cooled after a strong earlier run.

If this kind of volatility has your attention, it can be helpful to see how other gold producers are trading right now using a focused screener such as 34 elite gold producer stocks

With Osisko Development trading at a steep discount to its analyst price target and to some estimates of intrinsic value, yet still showing recent share price volatility and losses, is this a genuine buying opportunity or is the market already pricing in its future growth?

Price to sales of 34.1x: Is it justified?

On valuation checks, Osisko Development screens as cheap on one measure yet expensive on another, which is where things get interesting for investors comparing it with peers.

The SWS DCF model estimates a fair value of about CA$12.06 per share, compared with the last close of CA$4.22, which implies a steep discount to that cash flow based estimate. A DCF works by projecting future cash flows, then discounting them back to today to see what those future streams could be worth in present terms.

Set against that, Osisko Development trades on a P/S ratio of 34.1x. That is far higher than the Canadian Metals and Mining industry average of 5.9x and also above an estimated fair P/S ratio of 29.1x. So even with the share price under pressure recently, the stock still carries a premium on sales compared with both peers and the modelled fair multiple that markets could gravitate toward.

Investors weighing these mixed signals, a large discount to the SWS DCF fair value but a rich P/S ratio versus peers and the fair ratio, may want to understand how the fair multiple is derived through regression analysis and what it implies if sentiment shifts toward that level. Explore the SWS fair ratio for Osisko Development

Result: Price-to-sales of 34.1x (OVERVALUED)

However, recent share price declines, ongoing net losses of CA$93.793 million, and a market cap of about CA$1.29b could all challenge the bullish narrative.

Find out about the key risks to this Osisko Development narrative.

Another way to look at valuation

While the P/S ratio suggests Osisko Development is expensive versus peers and the fair ratio, the SWS DCF model points in the opposite direction. At CA$4.22, the stock is trading at a 65% discount to an estimated fair value of CA$12.06. This raises a simple question: which signal should you trust more?

For a closer look at how that cash flow based value is built, including the key assumptions that sit underneath it, Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Osisko Development for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 9 high quality undervalued stocks. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

Next Steps

With mixed signals on valuation, risks and rewards, the key question is what you make of the set up right now. It is worth reviewing the underlying data, sentiment drivers, and potential scenarios in full by checking the 3 key rewards and 2 important warning signs

Looking for more investment ideas?

If Osisko Development has caught your eye, do not stop there. Broadening your watchlist with other ideas can help you spot opportunities you might otherwise miss.

This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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